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Motivated by recent congressional interest in eradicating government sponsored enterprises (GSE), the purpose of this paper is to develop a framework to price the implicit government guarantee embedded in the bonds issued by the Farm Credit System.

The paper uses the Black‐Scholes model to extract the implied volatilities of the guarantee and then substitute into the model the volatility in historical land prices. The model is developed along the lines of Merton's bond pricing formulation of implicit calls and puts on bond yield risk and default.

Bottom line results show that the average bond yield for a 3M Farm Credit bond from January 13th 2009 to February 10th 2011 would be 0.3744 percent if the Farm Credit System had no GSE status, which is 13.62 bps higher than the actual bond yield. The difference between the hypothetical yield and the actual yield increases with increasing maturity and reaches its peak with 10Y bond where the difference between the hypothetical yield and the actual yield is 68.81 bps. The paper concludes that given the current state of the agricultural credit market in the USA that loss of GSE status and the implied guarantee of Farm Credit bonds would have a minimal effect on short term notes, with a more substantive increase in longer term yields.

The GSE status of the Farm Credit System is an important political issue. This paper provides first estimates of what impact might result from its loss of GSE status. The methods employed are consistent with current models of bond pricing and the results are of direct relevance to Farm Credit System regulators and congressional discussions.

Farm credit is important, if the Farm Credit System loses its GSE status this might affect the competitive balance between commercial and system lenders.

This paper uses option price theory based upon the spread between farm credit bonds and treasury. The approach used requires daily data, but not all attributes of bonds are known. Nonetheless, the results show remarkable consistency for a problem that is largely understudied. There is a need for policy makers, including the US congress to understand the value of government guarantees whether implicit or explicit.

Earlier most of the research groups have designed and developed hybrid renewable energy system models with technological, scientific and industrial advancement for the energy systems, but slight attention has been paid towards the grid-connected sustainable urban residential energy systems (SUR_eS) for metropolitan cities. The current research wishes to design, model and analyze grid-connected energy system for residential applications for sustainable urban residential energy system. The works aims to explore the potential of the augmented energy system for grid-connected energy system.

The proposed grid-connected SUR_eS are validated for a sample location at New Delhi (India) with a hybrid optimization model for electric renewable (HOMER) software to define and understand the various load profile. It presents the sensitivity analysis approach to validate the design of the proposed energy system.

The obtained results reports the key barriers, proposed model and scenarios for sustainable urban energy system development.

Similar approaches can be replicated to design and develop an independent, self-sustainable cleaner and environmental-friendly energy system in the future scenario for the extension of complex grid infrastructures.

It will assist the stakeholder in solving the complex urban sustainability issues raised due to the shortage of energy.

It will offer a clean and environment friendly sustainable energy resources with reduced carbon emissions. It will benefit sustainable energy resources with a mix of challenges and opportunities, to suggest an approach for implementation of efficient energy policies to optimize the existing and forthcoming energy systems.

The current research offers a design and model to analyze grid-connected energy system sustainable urban residential applications. It explores the potential of the augmented energy system. The proposed model are validated for a sample location with HOMER simulation software to define and understand various scenarios of the multiple load profile. The work presents the sensitivity analysis approach to validate the proposed energy system.